MECKLENBURG COUNTY, NORTH CAROLINA

Transcription

1 MECKLENBURG COUNTY, NORTH CAROLINA PROCUREMENT POLICY 1. POLICY STATEMENT The policy of Mecklenburg County (the County ) is to maintain a responsible procurement process that obtains the best apparatus, supplies, materials or equipment (hereafter referred to as goods ), services, technology and construction at the best price and in compliance with applicable law. 2. POLICY PURPOSE The purpose of this policy is to establish guidelines and accountability for the expenditure of funds used to procure goods and services used by County departments. This primary purpose is met by establishing and implementing a system of internal controls that provide reasonable assurance that the County is in compliance with North Carolina General Statutes Chapter 143, Article 8 Public Contracts as it may be amended from time to time. Each County department shall be responsible for ensuring that all procurements undertaken within departments comply with (a) all applicable State and federal laws 1 ; (b) local ordinances or directives established by the Mecklenburg County Board of County Commissioners ( BOCC ) from time to time; (c) this Policy; and (d) all other approved policies and procedures. 3. POLICY GOVERNANCE This policy is intended to govern the purchase of goods, apparatus, supplies, materials, equipment, professional and non-professional services, technology and construction. 4. PROCUREMENT PHILOSOPHY In all matters related to procurement, County employees should ensure diligence related to the application of statutory requirements and regulations and with generally accepted professional standards in such a manner so as to ensure the maximum efficiency of governmental operations. To the extent that all statutory requirements are met, County employees are empowered with the necessary authority and flexibility to ensure the appropriate, cost effective, efficient, and timely procurement of necessary goods and 1 For guidance in interpreting State law, a great resource is A Legal Guide to Purchasing and Contracting in North Carolina for North Carolina Local Governments written by Frayda S. Bluestein and published by the UNC School of Government. For additional assistance in interpreting State law, contact the County Attorney s Office. 1

2 services. This in turn enables all County departments to achieve the mission of effectively delivering services to the residents of Mecklenburg County. 5. PROCUREMENT ORGANIZATION The procurement process within the County is primarily decentralized. Decentralization allows for localized procurement responsibility within County departments and great flexibility for County employees to take responsibility for the timely and accurate procurement of goods, services, technology and construction. As an added support for County departments, access to a centralized support system in the form of the consolidated City-County Procurement Services Division ( PSD ) has been established. The centralized support is designed to give County employees access to procurement consulting expertise to ensure proper application of legal procedures, as well as staff support capable of managing formal, larger scale, or more technically difficult procurements. Additionally, PSD is able to work on the County s behalf to provide opportunities to realize the impact of consolidated, discount and volume purchases, as well as the opportunity to maximize savings in the form of taxpayer dollars while minimizing administrative burden. 6. GENERAL POLICY RESPONSIBILITIES The County Finance Department in coordination with PSD shall have the responsibility for maintaining and administering this policy. The County Finance Department, at the discretion of the County Manager s Office, shall be responsible for implementing this policy and delegating any necessary duties required to perform procurements. Compliance and monitoring of this policy shall be managed as directed by the County Manager s Office. All County departments and employees are subject to and responsible for the provisions of this Procurement Policy. This Procurement Policy, and any amendments, must be approved by the County Manager. No County employee shall purchase or contract for any goods, services, technology or construction except as provided in this policy and all applicable statutes. Any purchase or contract made contrary to the provisions of this policy may be voidable at the option of the County. 7. GOVERNING STATUTES AND POLICIES This policy is primarily G.S. guided by Article 8 of & SL G.S G.S G.S &.3 Subject Formal bids: apparatus, supplies, materials or equipment over $100,000; and construction or repair contracts $500,000 and above. Informal Bids: apparatus, supplies, materials or equipment greater than $30,000 and less than $100,000; and construction or repair greater than $30,000 but less than $500,000. Specifications and contracting methods for construction projects over $300,000 Minority business enterprise requirements for building construction projects. 2 SL increased the statutory requirement for formal bids for apparatus, supplies, materials and equipment for Mecklenburg County from $90,000 to $100,000. 2

3 G.S G.S K 2004 BOCC Resolution on Environmental Leadership Policy Selection of Architect, Engineer, Surveyor, or construction manager at risk. Guaranteed Energy Savings Contracts Environmental Leadership Action Plan indicating Purchasing Goals, Purchasing Guide and the Charlotte-Mecklenburg Certified Site Inspector (CMCSI) Program MWSBE Policy Buy American Policy Minority, Women and Small Business Enterprise Procurement Policy and Procedures. Preference for products manufactured in the United States of America 8. CONTRACT EXECUTION AND APPROVAL County departments, employees and/or governing bodies are authorized to approve purchases within certain categories and thresholds. The following authorities to award contracts have been established: SUBJECT TRANSACTION Facility rentals for special events or training Contracts with schools, universities or other agencies for student interns Goods, apparatus, supplies, materials and equipment less than $100,000 Goods, apparatus, supplies, materials and equipment $100,000 and above. Equipment purchases less than $100,000 if trade-in is involved Contract Amendments for Goods Technology goods less than $100,000 Technology goods $100,000 or more Contracts for services Contract Amendments for Services Construction contracts less than $500,000 Construction contracts $500,000 or greater Leases, rentals and maintenance contracts APPROVAL AUTHORITY County Manager or Designee. County Manager or Designee. County Manager or Designee BOCC County Manager or Designee County Manager or Designee (as long as the amendment is less than $100,000) County Manager or Designee BOCC (except if purchased from a state or federal contract) County Manager or Designee County Manager or Designee County Manager or Designee BOCC County Manager for contracts less than one year. BOCC for agreements greater than one year, or if the term crosses fiscal years and does not include a non- 3

4 appropriations clause. Architect, Engineer, Surveyor, or Construction Manager at Risk Contracts less than $30,000 Architect, Engineer, Surveyor, or Construction Manager at Risk Contracts $30,000 or more Energy Service Companies (ESCO s) for Guaranteed Energy Savings Contracts County Manager or Designee BOCC BOCC For additional information regarding Architectural, and Engineering and Surveying Contracts, please see exhibits C and D. 8.1 County Manager Authorization Annually, the County Manager is authorized by the BOCC to make certain procurement awards and decisions. Pursuant to the Mecklenburg County Budget Ordinance, the following authorizations are established: 1) The County Manager or his designee may award and execute contracts that are not required to be bid or which G.S allows letting by informal bids so long as the budget or appropriate capital project ordinance or capital reserve fund contains sufficient appropriated but unencumbered funds for such purposes. 2) On behalf of the County, the County Manager or his designee, may enter into and execute change orders or amendments to construction contracts when the appropriate capital project or capital reserve fund contains sufficient appropriated but unencumbered funds allocated for such construction projects. 3) On behalf of the County, the County Manager or his designee, may execute contracts with outside agencies to properly document budgeted appropriations to such agencies where G.S. 153A-248(b), 259, 449 or any similar statutes require such contracts. 4) The County Manager or his designee may execute contracts on behalf of the County, to render services, at not less than full cost, with the State, other political subdivisions of the State and outside agencies. 5) The County Manager or his designee may execute contracts or other agreements with the State of North Carolina required by the State in connection with the receipt of revenues that are included in the estimate of revenues. 6) The County Manager shall exercise his authority to designate individuals who are authorized to award and execute contracts only by a written memorandum of delegation filed with the Clerk to the Board, the Mecklenburg County Attorney, and the Director of Finance, except that the County Manager may designate the General Managers without filing a written memorandum of delegation. Provided, however, annual machine maintenance agreements, equipment leases for fewer than 30 days, and purchase orders may be processed 4

5 without the signature of the County Manager or his designee if processed in accordance with policies of the Finance Department. Failing to take into account all costs associated with a purchase or contract or dividing a purchase or contract for the purpose of circumventing the requirements set forth in this section constitutes a violation of this Policy and may also constitute a violation of state law. Violations of the requirements set forth in this section will be reported to the County Manager s Office and the County Finance Department with a referral to Internal Audit for review. 9. APPROPRIATIONS AND ENCUMBRANCES Under the Local Government Budget and Fiscal Control Act, all expenditures must be supported by an appropriation. In G.S (b), bills, invoices, or other claims against a local government or public authority may be approved if 1) the amount is determined to be payable and 2) the budget or project ordinance includes an appropriation authorizing the expenditure and either (i) an encumbrance has been previously created for the transaction or (ii) an unencumbered balance remains in the appropriation sufficient to pay the amount to be disbursed. Contracts, including purchase orders, must include a preaudit certificate signed by a Finance Officer. When there is no commitment or obligation to utilize a particular contract, thus no encumbrance, the County Finance Department may take exception to the pre-audit certificate requirement and may not sign the contract. In the event that the BOCC does not appropriate the funding needed by the County to make payments under any given contract which has a non-appropriation clause for any given fiscal year, the County will not be obligated to pay amounts due beyond the end of the last fiscal year for which funds were appropriated. In such event, the affected contract may be terminated at the discretion of the County and generally either at the end of the fiscal year for which the funds were appropriated or upon thirty (30) days written notice. All appropriations for goods and services which have not yet been received or provided must be encumbered in one of the following methods: 1) For the purchase of commodities $30,000 and greater, a purchase order is required. Entered into the financial system as a requisition, these are routed to PSD for formal or informal bids. PSD converts the requisition into a purchase order. A written contract is also required for the purchase of commodities over $100,000. 2) For the purchase of commodities between $1,500 and $29,999 a departmental purchase order is required. 3) A General Accounting Encumbrance (GAE) is required to encumber funds for professional or non-professional services without a written contract. 4) A Service Contract Formal (SCF) is required to encumber funds for professional or non-professional services where a written contract has been executed. 5

6 Point of Sale Purchasing Encumbrance Exceptions For purchases that are not witnessed by a purchase order or contract but are paid for at the point of sale with cash, or by credit or procurement card, no encumbrance is required. The expenditure however must be accounted for and recorded after the fact. In a similar instance when goods or services are purchased without a purchase order or contract and are paid for after the fact, no encumbrance is needed, although the liability must be recorded. Purchase orders and contracts will not be processed after a purchase has been made or after the goods or services have been received. The procedures for approval and processing of these reimbursements are included in the Mecklenburg County Financial Policies and Procedures Manual under Accounts Payable, Section K. Procurement Cards (P-Cards) P-Cards may be used for incidental purchases of goods or services at limits approved by a Department Director or his designee pursuant to the Mecklenburg County Procurement Card Policies and Procedures Manual. Employees using P-Cards must comply with the requirements and procedures set forth in the manual which is maintained by the County Finance Department. P-Cards are considered an alternative payment tool and not a procurement method. Use of a P-Card does not exempt any County employee from following the requirements and procedures set forth in this Policy or the County Procurement Process and Procedure Manual for that type of purchase, nor does it exempt compliance with applicable statutes, regulations, governing board directives, policies, procedures and best practices. The County recommends to the extent possible, that Departments use informal methods of procurement such as cost comparisons and quotations when considering the use of a P- Card. Employees who have been issued a P-Card may initiate transactions in-person, by telephone, or internet, within the limits set forth in the Procurement Card Policies and Procedures Manual. Additional information about the County s P-Card program may be found at the following link: PROCUREMENT THRESHOLDS AND MINIMUM REQUIREMENTS The following thresholds and minimum requirements are established for the procurement of goods, apparatus, supplies, materials, and equipment. In all instances County Departments are responsible for adhering to thresholds and minimum requirements established in the County s MWSBE policy. Dollar Threshold for Goods Minimum Requirements Responsible Party $0 - $1,499 Multiple quotes not required Authorized Department Staff P-Card or GAX Department purchase order optional $1,500 - $29,999 Multiple quotes not required Authorized Department 6

7 PD (Dept Purchase Order) Depts. may use a lower threshold. $30,000 - $99,999 Informal bid process RQS (Requisition) Purchase Order $100,000 or greater Formal bid process BOCC Approval Contract Staff Authorized Department Staff PSD Department; or PSD (requires PSD Request Form) Department and/or PSD Authorized Department Staff in conjunction with County Legal or PSD (if PSD conducts solicitation process) The following thresholds and minimum requirements are established for the procurement of construction and for architecture, engineering, and surveying services: Dollar Threshold for Minimum Requirements Responsible Party Construction $0 - $29,999 Best business practice based on the needs of the department Authorized Department Staff $30,000 - $499,999 Informal bid process Authorized Department Staff $500,000 or greater Formal bid process BOCC Approval Authorized Department Staff Contract Selection of Architect, engineer, surveyor, or construction manager at risk Less than $30,000 Minimum Requirements County Manager Approval Contract Responsible Party Authorized Department Staff 7

8 More than $30,000 Best Qualified Section Procedure See Exhibits F & G 3 BOCC Approval Contract Authorized Department Staff The following thresholds and minimum requirements are established for the procurement of non-professional and professional services including technology services: Dollar Threshold for Minimum Requirements Services $0 - $99,999 Best business practice based on the needs of the department. $100,000 or greater Formal Request for Proposals (RFP) Responsible Party Department or PSD (requires PSD Request Form) Department or PSD (requires PSD Request Form) The following thresholds and minimum requirements are established for the procurement of technology goods: Dollar Threshold for Minimum Requirements Technology $0 - $29,999 Request for technology purchase to IST. $30,000 - $99,999 Request for technology purchase to IST. Informal Request for Proposals $100,000 or greater Request for technology purchase to IST. Responsible Party Authorized Department Staff, IST, and/or PSD Authorized Department Staff, IST, and/or PSD Authorized Department Staff, IST, and/or PSD Formal Request for Proposals BOCC Approval Department and/or PSD Contract **Exception to bid statutes Purchases made from North Carolina State Office of Information Technology Services State Contract are exempt from formal and informal bidding requirements and do not require approval by the BOCC. All such technology purchased from state contracts shall be at the discretion of the Authorized Department in collaboration with IST. 3 G.S (b) authorizes the BOCC to exempt any particular project from following this selection procedure in the discretion of the BOCC by stating the reasons therefor and the circumstances attendant thereto. 8

9 Selection of ESCO For Guaranteed Energy Savings Contract Every dollar amount (these are always very large dollar contracts) Minimum Requirements Best Qualified Section Procedure See Exhibit J BOCC Approval Contract Responsible Party Real Estate Services Department 10. METHODS OF PROCUREMENT County departments will primarily utilize two (2) methods of competitive procurement as follows: 11.1 Formal Bid Process A formal bid process is required under the two (2) following conditions: 1) The purchase or lease purchase of goods, apparatus, materials, supplies and equipment requiring an estimated expenditure of $100,000 or more; and 2) The purchase of construction and repair projects of $500,000 or more. These two categories of purchases must be procured through a competitive bid process in compliance with N.C. General Statute Requirements for a Formal Solicitation are detailed in the Mecklenburg County Procurement Process and Procedure Manual. According to G.S all formal bidding procedures must: 1) Be advertised in a newspaper having a general circulation in Mecklenburg County or by electronic means (if Board approved) or both at least seven (7) days prior to the bid opening. Advertisements must contain: a) the time and place specifications will be available; b) the time and place bids/proposals will be opened; and c) a statement reserving the right to reject any or all bids; 2) Bids must be submitted in a sealed opaque envelope or package to ensure that prices and terms will not be disclosed prior to the bid opening; 3) All bids must be opened in public and the pricing read aloud and recorded; 4) Proper storage and maintenance of the formal procurement documentation must be accomplished in compliance with the North Carolina Public Records Law and Retention Schedule; 9

10 5) Consideration of the need for bid deposits and/or performance and payment bonds must be included in the process; 6) Award must be made to the lowest responsible bidder taking into consideration quality, performance, and the time specified in the bids for the performance of the contract; and 7) The BOCC must approve all formal contracts at a duly called public meeting. When purchasing commodities that include the trade-in of used equipment (including technology), if the trade-in value and the amount to be paid for the new equipment exceed $100,000 combined, the formal bid process must be followed Informal Bid Process An informal bid process will be used in the following conditions: 1) The purchase or lease purchase of goods, apparatus, materials, supplies and equipment requiring an estimated expenditure of $30,000 to $99,999; and 2) The purchase of Construction and Repair Projects costing from $30,000 to $499,999. Although G.S does not specify any particular method for securing informal purchases, it does require that purchases or contracts be awarded to the lowest responsible bidder taking into consideration quality, performance, and the time specified in the bids for the performance of the contract. While informal methods are acceptable, County departments may also choose to utilize a more formal process. If the estimated total dollar amount of an informal purchase is over $90,000, it is recommended to proceed with a formal bid process to avoid re-bidding should all quotes received total over $100,000. Informal purchasing methods include the following conditions: Requests for quotations, with submission via fax, , telephone, and/or mail is acceptable; All informal quotations should be on an official quote form, a standard template, or a vendor developed form or letterhead and shall include the date of submission and a vendor signature; Informal purchases do not require advertisement for requests for quotes; Proper documentation, storage and maintenance of the informal solicitation documents in compliance with the North Carolina Public Records Law and Retention Schedule; Informal purchases do not require approval by the BOCC. 10

11 11.3 Request for Proposals (RFP) G.S contains an alternative provision which gives local governments more flexibility in purchasing a combination of information technology, goods and services. The statute authorizes local governments to use a Request for Proposals (RFP) process rather than an Invitation to Bid (ITB). An RFP process may be used to purchase services as well as any combination of goods or services, particularly when the services component of the purchase is greater than the goods component. 4 Technology and services contracts, and other contracts that include a combination of goods and services, are not necessarily well-suited or best handled using the traditional bid processes called for in G.S , and therefore a more flexible approach by County departments is desirable. The RFP process allows the County to employ a more flexible standard of award that allows for decisions to be made based on need and/or best value, not just low bid. Section 13 of this Policy details the procedures for utilizing an RFP process. 12. CONTRACTS AND AMENDMENTS In determining the amount of a contract for purposes of award authority or selection of a procurement process, the amount of the contract is the total of all expenditures the Department estimates it will spend over the term of the contract and any extensions that the vendor or the County has a right to exercise or anticipates entering into. Expenditures include all costs the County expects to incur for equipment, licensing fees, service fees, maintenance and support and other associated fees. For Formal Solicitations, the Request for Board Action (RFBA) must include all goods that the Department anticipates procuring over the life of the contract or any contract extension Contract Amendments to Add Goods If the Department decides subsequent to contract award to procure additional goods that were not anticipated at the time of contract award, the amendment to add the additional goods or services will be treated as a separate contract for purposes of determining contract award authority. Notwithstanding this, if the amendment will make total expenditures under the contract exceed $100,000, then the issue of whether to seek BOCC approval will be decided by the County Manager s Office. If the amendment in and of itself will add $100,000 or more to the contract, the Department will need to obtain BOCC approval regardless of whether the Department anticipated making the expenditure at the time of contract award. This does not apply to construction contracts. 4 See exhibit F on the predominant aspect rule where there is a combination of goods and services that are not information technology goods and services that need to be obtained. 11

12 All amendments must be subsequently reviewed and approved by the original signing authority. At the discretion of the County Manager s Office, certain contracts originally approved by the BOCC may be processed through the County Manager s Office if substantive changes are not required. This excludes construction projects provided that the appropriation of additional funds is not necessary. In general, all amendments modifying the term, the price, the scope, and certain terms and conditions must be approved by the BOCC. Splitting purchases to avoid either the formal bidding or contract approval processes will constitute a violation of this policy and possibly G.S Contract Extensions and Renewals Contract extension and renewal options and anticipated amendments shall be counted in calculating the total amount of a contract when considering whether or not BOCC approval is required. For Formal Solicitations, the Department should ask BOCC to approve the contract and authorize the exercise of all options and extensions that the Department expects to enter into Contract Award Authority Violations Failing to take into account all costs associated with a contract or dividing a contract for the purpose of circumventing the requirements set forth in this Section constitutes a violation of this Policy and may also constitute a violation of G.S Violations of the requirements set forth in this section will be reported to the County Manager s Office and referred to Internal Audit for review Contract Terminations Department Directors are authorized to terminate contracts that have been approved by the County Manager or Designee, except when termination payments are required, excluding those for goods and services already received. Contract terminations that trigger termination payments require the review and approval of the County Attorney. Contracts that have been approved by the BOCC will have to be taken to the BOCC for approval to terminate. Contract terminations must be in writing Countywide Master Contracts Every effort must be made to purchase from master contracts. The contracts have been through the formal solicitation process and negotiated discounts have been secured. A list of these vendors is posted on the City s website at the link below Insurance Requirements for Contracts The Risk Management Division of the City of Charlotte Finance Department provides insurance and risk management services to the County. Insurance requirements for contracts will vary depending on the good or service being 12

13 13. SERVICES procured. The County Attorney determines which contracts require the approval of the Risk Management Department. Exhibit E provides general information on insurance requirements for contracts. Non-professional or professional services (other than construction), are distinguished by the provision of personal performance rather than the delivery of a tangible item. Although the procurement of services greater than $100,000 is not governed by G.S , these procurements must undergo an RFP process. Services exempt from the RFP requirement include those human services for which continuum of service delivery is paramount, competition will not yield significant benefits or when only a single vendor can provide a specific service. However, the County desires to take advantage of a flexible approach and allow County departments to procure services under $100,000 with or without a process. However, best business practices strongly suggest that testing the market for competitive pricing and creative solutions are beneficial. In some cases, a Department may need to purchase a combination of goods and services in a single procurement. In determining whether or not a purchase is subject to a mandatory procurement process, the predominant aspect review must be applied. The predominant aspect review will determine which element, goods or services constitute the larger portion of the cost. The element constituting the larger portion is the predominant aspect and the procurement method associated with that aspect must be followed. See Exhibit F for additional information on the predominant aspect review. County departments are encouraged to competitively solicit bids or proposals when there is a competitive market for the service and when it is in the best interest of the County. Although no procurement process is required for service procurements under $100,000, County departments may choose to utilize any formal or informal method of procurement for services. The standard for services contracting should be based on the best value or best overall proposal or solution. For services contracts, consider the following: 1) Issuance of a Request for Proposals (RFP) is the preferred method when and if a County department chooses to use a more formal competitive solicitation process; 2) The procedures for advertising and proposal opening are flexible; 3) The selection criteria in an RFP may be more subjective than that allowed in an ITB, and factors other than price may be considered; 4) Negotiation is allowed, and the County has more flexibility in waiving adherence to RFP requirements; 5) Award of service contracts may be based on factors other than cost and responsiveness with such factors as vendor experience, qualifications, and solution possible taking precedence over price; 6) A Department may waive the issuance of a competitive solicitation for a services contract when it is in the County s best interest to do so; 13

14 7) Services contracts, regardless of the amount, do not require Board approval if funds have been appropriated; and 8) The County Manager is authorized to approve, award and execute all services contracts Determining Best Value in Procurements In determining best value in procurements, consider the following: 1) The purchase price; 2) The reputation of the vendor and the vendor s goods and/or services; 3) The quality of the vendor s goods and/or services; 4) The extent to which the goods and/or services meet County needs; 5) The vendor s past relationship with the County; 6) The impact on the ability of the County to comply with the laws and rules regarding the procurement of goods and/or services; 7) The total long-term cost to the County of acquiring the goods and/or services; 8) The material used in repairing goods and/or property; 9) Adherence with the County Environmental Policy regarding purchase of Environmentally Preferable Products; and 10) Any other relevant factor regarding the particular good and/or service Independent Contractors or Former County Employees County departments requiring the services of independent contractors and/or former employees should refer to the Contractor Checklist to determine the status and ensure compliance with the Internal Revenue Employee Service requirements. According to the IRS regulations, when an independent contractor or a former employee is engaged to provide services, Mecklenburg County must determine whether they should be classified as an employee subject to withholding tax, or as an independent contractor. Determining independent contractor status is driven by facts and circumstances. The facts and circumstances that make one individual an independent contractor may differ from those that make another individual an employee. See Appendix G for the Independent Contractor checklist. 14. TECHNOLOGY The Information Services & Technology Department (IST) is responsible for procurement, including the bidding process, for all County technology items. Requests to purchase technology items from the approved Internal Service Requests list should be made to IST s Office of Asset and Procurement Management, which will coordinate the purchase. In order to assure efficient and appropriate deployment of technology items using their operating budget, Departments must go through the IST review process when they wish to purchase technology items. This includes items to be purchased with a P-Card. Any technology (hardware and/or software), that can or must be connected to and/or installed to a PC, Laptop, Printer, and/or the network, must be 14

15 bought through IST. Technology which is not being purchased with County funds and will not be owned by the County does not require the approval of IST, unless the item/s will be connected to the County network and/or used by County staff for County work. County funds are defined as any funds, grant or otherwise, that have been deposited into a Mecklenburg County account. County ownership is defined as any asset that is bought with County funds, where the County takes title of the asset, which does not have a board action specifying ownership outside the County. Example: "Community Alternatives Program - for Mentally Retarded or Developmentally Disabled": AMH has a BOCC authorization for this program, which allows them to buy a PC for a client to use in their home. The PC is bought in the name of the client, thus the County never has title to the PC. County departments are subject to the following procedural requirements: 1) All Departments must submit to IST a request for procurement of all technology items with a brief justification with the source of funds identified; 2) IST will review Department requests and provide recommendations as to the best solution for the stated need; and 3) Once a solution is agreed upon, IST will procure the technology item and handle installation. 15. PROCUREMENT EXEMPTIONS G.S defines a number of exemptions to the competitive bidding requirements. The following categories of purchases are exempt from both the formal and informal bidding requirements established in G.S However, the following list is just a shorthand statement of the categories which are exceptions to the competitive bidding requirements. Before attempting to make purchases using these exceptions, read the relevant sections of the statute contained in exhibit B very carefully as this statute provides additional guidance and limitations as to the use of these exceptions. Items 1) through 11) are found in G.S (e). Statutory guidance as to the other items is found in the statutes listed beside the item. 1) Purchases from other units of government; 2) Emergencies; 3) Group or Cooperative Purchasing Programs; 4) Change Order Work; 5) Gas, Fuel, and Oil; 6) Sole Source Purchases; 7) Information Technology Goods and Services awarded by the North Carolina Office of Information Technology Services; 8) Guaranteed Energy Savings Contracts; (See also G.S ) 9) State Contract Purchases; 10) Federal Contract Purchases 15

16 11) Purchase of Used Goods; 12) Construction Management at Risk; 13) Previously Bid or Piggybacking Contracts; (See G.S (g)) 14) Solid Waste Management Facilities; (See G.S ) 15) Use of Unit s Own Forces (force account work); (See G.S & SL ) 5 and 16) Purchases of Goods and Services from Nonprofit Work Centers for the Blind and Severely Disabled. (G.S ) Five of the most common exemptions are described below. These exemptions apply only to the method of procurement and not to who can award the contract. Unless otherwise indicated, the contract award authority requirements still apply to procurements under these exemptions. Sole Source. This exemption applies to the solicitations of goods both formal and informal when: 1) performance or price competition for a product is not available; 2) a needed product is available from only one source of supply; or 3) standardization or compatibility is the overriding consideration. Sole source purchases of goods totaling $30,000 or more must be supported by a Sole Source Justification Form, (See Exhibit H). The Sole Source Justification Form must be completed and approved by a Department Director or designee prior to submission to PSD. PSD will review all Sole Source Justification Forms for compliance with the Mecklenburg County Process and Procedure Manual and state law, provide an indication of concurrence or non-concurrence, ensure application of the required procedures, and maintain the sole source justification documentation. Departments that seek to purchase goods as a sole source procurement not initiated by PSD must: (a) ensure the correct application of the sole source exception, (b) complete and submit to PSD a Sole Source Justification Form and (c) maintain all required documentation as detailed in the Mecklenburg County Procurement Process and Procedure Manual. Sole source purchases are subject to review by Internal Audit. A sole source determination is valid for either the term of the written contract if one has been executed or until the purchase order is closed. Sole source procurements require approval by the BOCC. Cooperative Purchasing Programs. This exemption allows Departments, under the appropriate circumstance, to utilize cooperative purchasing programs. Cooperative purchasing programs are formally organized programs that offer contracts that have been 5 SL increases just for Mecklenburg County the force account limit to $300,000, but only for nonutility construction or repair work for park and greenway projects. 16

17 competitively bid on behalf of multiple entities that result in discount prices. Cooperative agreements may be prepared by PSD or by other local, state, or national entities. In order for a cooperative purchasing program to be considered a legitimate and appropriate procurement method, the contract that the County desires to purchase under must have been competitively bid, and must meet or exceed County needs related to specification, availability and cost per the Mecklenburg County Procurement Process and Procedure Manual. These procurements do not require the approval of the Board of County Commissioners. State Contract Purchases. [G.S (e)(9)] Departments may utilize State of North Carolina contracts to procure items available under contracts awarded by a North Carolina State agency if the vendor is willing to extend to the County the same or more favorable prices, terms and conditions. Before purchasing from a North Carolina State contract, however, Departments should conduct enough investigation to ensure that the specifications, terms and conditions, and pricing meet or exceed what might be available through an internal procurement process per the Mecklenburg County Procurement Process and Procedure Manual. These procurements do not require the approval of the Board of County Commissioners. Federal Contract Purchases.. [G.S (e)(9a)] Departments may utilize contracts established by the United States of America or any federal agency, if the vendor is willing to extend to the County the same or more favorable prices, terms and conditions. As is the case with North Carolina State contracts, before purchasing from a federal contract, Departments should conduct enough investigation to ensure that the specifications, terms and conditions, and pricing meet or exceed what might be available through an internal procurement process per the Mecklenburg County Procurement Process and Procedure Manual. These procurements do not require the approval of the Board of County Commissioners. Piggybacking. [G.S (g)] THIS EXCEPTION ONLY NEEDS TO BE USED WHEN PURCHASING FROM A STATE OR SUBDIVISION OF A STATE OTHER THAN NORTH CAROLINA, AND THEN ONLY WHEN THE PURCHASE IS NOT BEING MADE UNDER THE COOPERATIVE PURCHASING EXCEPTION IN G.S (e)(3). Piggybacking allows Departments to purchase goods without bidding from a person or entity that has, within the past twelve months, contracted to furnish an item to any other state public agency, including subdivisions, anywhere in the country. The price and terms must be as good as 17

18 or better than those that could be obtained through formal bidding, and the item specification must be the same. Additional requirements apply, such as approval by the BOCC, as outlined in the Mecklenburg County Procurement Process and Procedure Manual. Emergencies. [G.S (e)(2)] Departments are not required to utilize formal bidding processes when a special emergency is in effect, such that the health and safety of the people or their property are in jeopardy. Purchases needed in response to a natural disaster or other sudden and unforeseeable situations most closely reflect the intent of the emergency exemption. Emergency procurements must be approved by the County Manager s Office. The North Carolina Supreme Court has interpreted the emergency exemption to the bid statutes very narrowly, and the situations in which it may legitimately be used are rare. The requirements for invoking the emergency exemption are: 1) The emergency must be present, immediate and existing; 2) The harm must be one that cannot be averted through temporary measures; and 3) The emergency cannot be self created due to failure to take precautions. Purchase of Used Goods: [G.S (e)(10)] Local governments may purchase used apparatus, supplies, materials or equipment without complying with the competitive bidding requirements. This exception recognizes the situation that usually exists with used equipment, which is that each item is unique in terms of age and condition, making bidding impractical. The exception does not apply, however, to remanufactured, refabricated, or demo items. For purposes of this exception, the statute defines a demo item as one that is used for demonstration and is sold by the manufacturer or retailer at a discount. These procurements do not require the approval of the Board of County Commissioners. 16. ENVIRONMENTAL CONSIDERATIONS The BOCC has requested inclusion of environmental considerations in purchasing decisions for goods and services. In 2004, the BOCC created an Environmental Leadership Team to advise and guide the County in environmental initiatives that will set an example for public and private sector organizations in our region. An Environmental Leadership Policy and associated action plan provide the principles and guidance for recurring activities of the County that will improve its environmental performance. This policy furthers the County s goal to be the best local government service provider. You may find the Environmental Leadership Policy at the following link: 18

19 17. MINORITY, WOMEN AND SMALL BUSINESS ENTERPRISES The goal of the MWSBE Program is to provide minority-owned, women-owned and small business enterprises (collectively MWSBE ) as well as other responsible vendors with a fair and reasonable opportunity to participate in the County s business opportunities. County staff involved in the procurement of goods and services greater than $1,000 are expected to make good faith efforts to utilize MWSBE vendors in according the procedures outlined in the MWSBE Program Policy. Department Directors shall be solely accountable for adhering to these procedures. A complete copy of this policy may be found at the following link: BUY AMERICAN The BOCC adopted a policy directing County employees procuring or contracting for goods, supplies, materials or equipment to give preference as far as may be practicable to products manufactured in the United States of America. See Appendix I for the Buy American Policy. 19. ETHICS AND CONFLICTS All County employees involved in procurement activities must at all times: 1) act responsibly; 2) conduct business honestly; 3) avoid wasteful and impractical purchasing practices; 4) avoid real or perceived conflicts when conducting business on the County s behalf; 5) comply with all applicable federal, state or local laws or regulations; 6) comply with the County s Code of Ethics and any other applicable County policies; 7) maintain fiduciary responsibility and integrity; and 8) advise departmental personnel of expected professional standards of ethical and legal behavior and comply during any procurement activities. 20. COUNTY DEPARTMENTAL RESPONSIBILITIES Department Directors and their designees are responsible for proactively managing procurement activities within their departments by: 1) Ensuring all procurement activities for goods, construction, technology and services are conducted in accordance with this Policy, all applicable state statutes, executive rulings, and the procedures and best business practices identified in the Mecklenburg County Procurement Process and Procedure Manual; 19

20 2) Ensuring available funding to meet encumbrance requirements for planned purchases and obtaining required approval for purchases; 3) Entering into contracts that are in the County s best interest; 4) Ensuring the appropriate utilization of competitively bid local, state, or national contracts when the specifications, terms and conditions, and pricing meet or exceed the Department s requirements; 5) Collaborating with PSD to develop contracts that meet department-specific, or countywide needs and requirements while also promoting economies of scale and volume discounting;. 6) Ensuring the procurement process is not manipulated in such a way as to circumvent BOCC approval or signature authority thresholds; 7) Working with the County s MWSBE Program to establish appropriate subcontracting goals and making efforts to seek out and include certified minorities and other County-identified socioeconomic groups as appropriate; 8) Promoting inclusion of environmental purchasing initiatives pursuant to the County s environmental policy; 9) Ensuring compliance with the procedures for utilizing procurement cards as set forth in the County s Procurement Card Policy and Procedures Manual; and 10) Ensuring the retention and maintenance of all relevant documentation, as required by the North Carolina Public Records Law and Retention Schedule, related to procurements made independent of PSD. 21. CITY-COUNTY PROCUREMENT SERVICES DIVISION RESPONSIBILITIES The City-County Procurement Services Division is responsible for: 1) Ensuring that purchasing and contracting activities performed by PSD are established in the best interests of the County and in accordance with current federal, state and local laws and County policies and ordinances; 2) Administering and maintaining the Mecklenburg County Procurement Process and Procedure Manual consistent with current federal, state, and local laws, County policies, and procurement industry best practices, and advising Department employees of acceptable procurement procedures and practices as outlined in the manual; 3) Identifying and referring policy violations to the County Manager s Office, the County Finance Department, and/or Internal Audit, at the discretion of the County Manager s Office; 4) Advertising and promoting acceptable stand alone or countywide contracts that may be utilized by all Departments; 5) Ensuring the timely review of requisitions and processing purchase orders; 20

21 6) Working collaboratively with Department staff throughout the fiscal year to review procurement needs, determine vendor usage and spending totals, and to establish contracts that promote economies of scale and provide savings; and 7) Retaining and maintaining all relevant documentation, as required by the North Carolina Public Records Law and Retention Schedule, for procurements managed by PSD. 22. COMPLIANCE AND MONITORING The County Finance Department and PSD will provide oversight for compliance and reporting related to countywide procurement activities in the following manner: 1) The County Finance Department and PSD will meet with County departments on an annual basis to discuss contracting opportunities and needs with the goal of working collaboratively towards application of compliance with this policy. 2) The County Finance Department and PSD will utilize various reporting capabilities to determine vendor spending totals within each Department and countywide throughout the year. 3) The County Finance Department and PSD will review expenditures on a quarterly and random basis to determine the need and feasibility of combining certain goods and services under countywide contracts in order to realize economies of scale and cost savings for all Departments. 4) The County Finance Department and PSD will contact Departments that are utilizing vendors with mid-year expenditures of more than $50,000 to inquire if the expenditures will continue and if total expenditures for the vendors are expected to exceed $100,000 for all Departments. 5) The County Finance Department and PSD will refer inappropriate spending activity identified through quarterly, mid-year, and annual reporting that is in violation of this policy to the County Manager s Office and Internal Audit for review and monitoring. 6) The County Finance Department, PSD, and Internal Audit will be responsible for reporting non-compliance with this policy to the County Manager. 21

22 EXHIBIT A DEFINITIONS A Legal Guide to Purchasing and Contracting for North Carolina Local Governments: A comprehensive volume, written by Frayda S. Bluestein and published by the UNC School of Government that explains and interprets North Carolina law on purchasing and contracting. Architectural, Surveying and Engineering Services: Contracts performed by private consulting firms as agents of Mecklenburg County including feasibility studies, planning, design, testing, and construction administration or management services. Best Value: Means the overall combination of quality, price, and various elements of required services that in total are optimal relative to the County s needs. Bidder: Any person, firm, partnership, corporation, association, or joint venture seeking award of a public contract or subcontract with the Mecklenburg County, or their agents. Board of Mecklenburg County Commissioners (BOCC): The governing board of Mecklenburg County. Change Order Work: A change in the original construction plans due to unanticipated circumstances that arise after the work is under way, are incorporated into the original contract through the use of a written change order. The change order must describe the additional or revised work undertaken in writing. Construction: Means building, altering, repairing, or improving any structure, building, road, drainage, or sanitary facility, and any draining, dredging, excavation, grading or similar work upon real property. [Demolition of a structure or building is not classified as construction and contracts for demolition work are normally awarded using the RFP process.] Contract: A legally binding agreement through which the Mecklenburg County agrees to procure goods or services. Contracts do not include financial partner agreements that the Mecklenburg County enters into with non-profit organizations to provide services to the community. Decentralized Purchase Order (PD): A legal contract document issued to a vendor for the purchase of goods or services less than $30,000 by the Department. Encumbrance: Expenditure commitments created by purchase orders or contracts that have been issued, but for which no goods or services have been received. Encumbrances become expenditures and liabilities only if goods or services are actually provided or rendered. Formal Solicitation: A competitive procedure required for awarding contracts equal to or exceeding $100,000. The requirements for a Formal Solicitation are described in Sections 6.1. and 6.2. of this Policy, and vary based on whether the Mecklenburg County is procuring goods or services. 22